When a lessee makes periodic cash payments for an operating lease, which of the following accounts is increased?
A)Lease Rental Expense
B)Leased Equipment
C)Obligation Under Capital Leases
D)Interest Expense

Question

Quizplus · Accepted Answer

When a lessee makes periodic cash payments for an operating lease, the account that is increased is Lease Rental Expense as it represents the expense incurred by the lessee for using the leased asset. Leased Equipment would be capitalized and recorded as an asset on the balance sheet; Obligation Under Capital Leases would be the liability account reflecting the present value of future lease payments for a capital lease; Interest Expense only arises in capital leases and represents the cost of financing the leased asset.

When a Lessee Makes Periodic Cash Payments for an Operating